PERSONAL INVESTMENT
The confessions of an investment addict
JAMES BARTHOLOMEW
Ican't give it up. It takes over, like infatuation with a woman or an obsession with gambling. If anything, it is more pervasive than other obsessions. The in- vestment obsession affects everything one does. Nothing is without an investment implication.
This summer has been sunny. For most people that means pleasant days in the garden reading a book or whatever. But not for the obsessed investor. For us it means that brewery profits will be up — so one should buy brewery shares unless they have already risen.
A trip to the shops is riddled with investment implications. British Homes Stores was very busy today. Perhaps Store- house, the holding company, is going to have a recovery in profits? What about Dixons? Their shares have been poorly in the last year or so. Maybe I had better pop in there. If they are doing good business, they definitely should be bought. One knows that the obsession is getting hold when one finds oneself going into shops without any intention to buy anything but only to gauge how business is doing.
The more earnest pages of the Guardian have their investment messages. Social trends are full of investment implications. As the British go green and begin insisting on organic vegetables and ecology-friendly washing powders, who is poised to benefit? Safeway and Tesco are more bio- degradable than Marks and Spencer. Perhaps I should rearrange the portfolio accordingly?
Even on holiday there is no escape. A trip to Malta in 1987 brought home how Malta's prospects had been radically im- proved by the election of a non-socialist government for the first time in 15 years. Surely property prices would rocket? The holiday was a good one. We saw several flats. No, we did not really have time for the churches.
All holidays are affected by the obliga- tory search for the latest edition of the Financial Times. The FT is like a double whisky for the investment drunk. It satis- fies for a little while but the longing for another one immediately begins to grow. The trouble is that when bought abroad, the FT is often a day old. So you know that a whole day of price movements has passed since the paper in your hand (which blots out the view of the pictures- que town square/mountains) was printed. If the FT is interested to know how late the paper arrived in Zermatt (1989), Vienna (1988), Albi (1988), Cahors (1987) and so on back down the years, I would be happy to pass on the information.
Seeing the world through investment- tinted glasses is an experience which most people, the fortunate majority, avoid. They do not realise what a luxury it is to play a game of cricket as the sun goes down on the village green without wondering whether sales of cricket bats are a rising or falling trend. Back in the changing room, we members of Investors Anonymous want to find out where the shirts were made. Are they all imported from Hong Kong or has India sold us a few? If India is making that sort of progress then perhaps we had better have another look at the Indian stock market.
I have a very good friend who is a professional fund manager. He has every excuse for being even more obsessed than I am. He has long thought about buying a house in London. Probably he would like to own a pleasant base in his home country while he works at international portfolios from San Francisco. But no, he cannot bring himself to buy a house. He knows he could make bigger profits through port- folio investment. He cannot see a house as something to enjoy. In fact enjoyment is something which is inherently dangerous since it can interfere with maximum invest- ment performance. He still wears a plastic digital watch which went out of fashion eight or more years ago. I expect he thinks he can make more money by buying shares than by buying a new watch. He is quite right of course, and I, too, wore a rather miserable watch for many years until I saw an investment opportunity in buying a beautiful antique watch made by Patek Philippe. I reasoned that, since mechanical watches were being replaced by quartz watches, the old mechanical ones would develop a certain social cachet. I turned out to be right. Too right. Now my Patek Philippe is so valuable I don't dare wear it on my wrist. If I lost the watch it would be a 100 per cent investment write- off with no reduction in my Capital Gains Tax liability. So, for a while, I went back to a cheap plastic watch. Then a close friend recklessly gave me an attractive watch, completely ignoring its lack of investment potential. It is hard to understand some people. The prime requirement for successful investment is a sincere desire to achieve it. From that, all else follows. Once a person is fascinated and absorbed, the lessons necessary for success will be learned. The most important lesson of all is that one should invest most heavily when one sees or understands something better than other people. Looking back at the best investments I have made over the years, I see that they were investments based on understanding which I had and which I reckoned other people did riot have or did not have quite so thoroughly as I did. Thus my visit to Korea over Christmas and New Year of 1981-82 turned out be invaluable. That trip brought home to me what a dynamic economy the country had. I was persuaded that doubts outside Korea about the country's political stability were exaggerated and that opinions inside Korea about share prices were still unduly affected by the second oil price shock in 1979-80. This led me to put most of the modest amount I then had into Korea and I subsequently enjoyed 25 per cent com- pound growth on my investment for the next six years. Incidentally, the FT could be bought without difficulty at the major hotels in Seoul in 1981/82. As for the Buddhist temples in and around the capital they are fascinating — so I am told.
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